Monetizing Games: Pay for Play

Praveen Alavilli, developer evangelist for the PayPal X Developer Network, spoke with me recently about the monetization of games and some of the details of the PayPal payment platform:

Arti Gupta: Why has monetization of games gained importance?

Praveen Alavilli: In the past couple of years, there has been a dramatic rise of the free-to-play and social games. On a Web-as-a-service platform and Web-as-a-cloud, it literally takes pennies to build and deploy stuff. When you want to sustain it for a longer time, you really need a new way to monetize. You need a way to generate a good revenue stream inside your games.

Obviously advertising has been one of the primary models, although it’s not really producing a direct revenue stream that users would generate to you. As a developer and a game player, you can’t imagine players stopping a game they are playing to click on an ad.

A.G.: What are the different monetization methods in gaming?

P.A.: The most common [is for users to] pay a onetime fee for playing the game. There are ways people are using subscriptions -- you pay a monthly or weekly or yearly fee for playing a game for different levels of the games.

There is a lot more traction in creating virtual economies inside the games. You may have heard about FarmVille and other games where they have their own virtual currencies and even create an economy where people are no longer buying different levels of games but using those to buy different elements inside a game. In FarmVille, you can use virtual currency to buy cows and pigs.

To create a virtual economy, you need a better game idea that better suits the use case for those kinds of things. The final monetization idea nowadays is selling merchandise. As games become more and more popular, you might want to consider selling T-shirts and hats -- that sort of thing.